Some Summit School District Board of Education members showed hesitancy regarding a request to allow the district to break its policy on reserve fund levels.

District staff members approached the board at a Jan. 30 meeting with a midyear budget change request to resolve an issue that they say emerged due to the timing of a contract negotiation. Officials said the request was necessary to comply with the Taxpayer Bill of Rights, or TABOR, which dictates how jurisdictions report the use of taxpayer dollars.

What board members ultimately approved goes against a standing policy set by officials, which is why some board members showed hesitancy. The policy was created to ensure 10% of the district’s general fund revenues remain restricted and unavailable for immediate use. State policy mandates the district save at least 3% of its general fund revenues as a reserve. That’s in addition to the district’s own policy of saving 7%, which amounts to a total of 10%. 

Board members gave the go-ahead to utilize 0.3% from the reserves fund, meaning the district now has 9.7% of its reserves budget restricted instead of 10%.

Board member Julie Shapiro said while she has full trust in the district’s finance staff, she is “really worried about that signal that (the board of education) is willing to go below (the threshold).” 

Shapiro was the only board member to vote against the proposal. Board member Lisa Webster was not present to vote. Every other board member voted yes. 

Chief financial officer Kara Drake said Superintendent Tony Byrd’s contract negotiations this year included a new contingency stating that if Byrd were to be terminated without cause, he would be paid out his salary for 12 months from the time of his dismissal. That 12 months of pay is what finance staff members would take out of the now-unrestricted portion of the reserve fund. 

Drake said while the district doesn’t anticipate spending it, any time a potential monetary obligation like this arises that wasn’t originally budgeted, TABOR requires it be documented and reflected in the fund balance. Though the situation is hypothetical and might not require an actual spend, the district was required to treat it as it did because of TABOR rules.

District staff members clarified the action does not change the overall fiscal outlook for 2024-25, and the district has over $300,000 more in its general fund than it first anticipated for the year due to cost-saving measures and increased earnings in interest.  

While this may be true, officials were wary of descending below the fund reserve threshold. 

“It doesn’t look good when we’ve clearly said multiple times over and over again we wouldn’t (go below the threshold) … I would say, on the flip side, we did do a budget that was above that level, (so it doesn’t impact finances overall),” board member Johanna Kugler said.

Shapiro said some of her concerns stemmed from the recent trend of enrollment declining and potential changes to per-pupil funding handed down from the state that could result in less funding for the district.

“I feel like we came close to the 10% and the budget approved in June, and then it put us like basically with no buffer to then deal with low enrollment and all of those things,” she said.

The original approved budget for the year did have a full 10% restricted in the reserve fund.

Board member Vanessa Agee, who voted to approve the motion, said she was worried about depleting reserves by any amount because it could impact district employees’ ability to negotiate salaries. 

Byrd said “there’s no way” he will be coming back to the board again next time the budget is reviewed with a reserve budget that doesn’t have 10% or more restricted. 

He said “I think it’s also important to say publicly for anyone listening out there, it’s going to be a tight year … I’ve already said to the principals, ‘don’t plan on spending any additional money.'”

Drake said she doesn’t anticipate any problems building a budget that meets that 10% requirement for next year.